Dive Brief:
- California-based nonprofit Prime Healthcare Foundation has acquired regional provider Central Maine Healthcare, expanding its presence on the East Coast.
- As part of the deal, Prime Foundation will assume full ownership of three hospitals, two senior care facilities, a medical college, a cancer care center and over 40 physician practices in central, western, and mid-coast Maine.
- Prime Foundation, an affiliate of hospital operator Prime Healthcare, has agreed to invest $150 million over the next five years into the system’s facilities, services and infrastructure, according to a Monday announcement.
Dive Insight:
The deal expands Prime Foundation’s footprint to 21 hospitals, according to the nonprofit.
Prime Foundation now owns hospitals in Maine, Texas, Ohio, California, Rhode Island, Pennsylvania, Illinois and Georgia. It has over $2 billion in assets, including funds donated from affiliate Prime Healthcare’s founder and CEO, Dr. Prem Reddy, and his family. Prime Foundation is led by Prime Healthcare’s chief medical officer of strategy, Dr. Kavitha Bhatia.
Financial terms of the Central Maine deal were not disclosed. The deal mechanism, called a membership substitution, makes Prime Foundation the sole corporate member and parent organization of Central Maine, according to a Prime spokesperson. Prime Foundation will assume all debts, obligations and costs of Central Maine.
The transaction, announced in January 2025, was sent to Maine regulators for approval. In its application, Central Maine and Prime said the acquisition would enable the health system to overcome “significant challenges,” including an aging and high government payer population, staffing shortages, low government reimbursements, and the need for significant infrastructure and technology investments.
Central Maine had posted at least two years of operating losses, including an approximately $30 million loss in fiscal year 2024 and a $19 million loss in 2025. Additionally, Central Maine said the healthcare needs of its population would continue to increase as its community ages — its 65 aged and older population is expected to increase by 17.2% over the next five years. Without the acquisition and investment, Central Maine —which serves about 400,000 patients and employs over 600 clinicians in the state — told regulators its financial position would “continue to deteriorate.”
Regulators approved the transaction in November. As part of the deal, regulators require that Prime continue to operate Rumford Hospital and Bridgton Hospital as either critical access or acute care hospitals for at least five years. The hospital Central Maine Medical Center must also be operated as a general acute care hospital.
In addition, Prime will not be able to make any material changes to the level of essential services offered at Central Maine. Operations at long-term care facilities must be continued and CMMC will maintain its trauma hospital accreditation for at least one year. Prime must also provide Central Maine’s annual financial statements for three years to state regulators.
Prime Foundation is an affiliate of for-profit hospital operator Prime Healthcare. Prime, which operates over 50 hospitals across the country, bills itself as a hospital turnaround firm.
Prime Healthcare has faced scrutiny from federal regulators in its acquired hospitals for submitting false claims to Medicare and engaging in kickback schemes.
In 2021, Prime, its CEO Reddy and a California cardiologist agreed to pay $37.5 million to settle allegations that Prime paid kickbacks to the clinician to solicit patient referrals.
Two years earlier, Prime and Reddy again agreed to pay $1.25 million after the U.S. claimed two Prime hospitals in Pennsylvania knowingly submitted false Medicare claims by admitting patients unnecessarily for overnight stays and for upcoding, or charging the government for more expensive patient diagnostic codes to increase reimbursement.
In 2018, Prime and Reddy agreed to pay the government $65 million to settle allegations that 14 Prime hospitals in California submitted false Medicare claims by unnecessarily admitting patients and upcoding.
